Brace yourself coffee lovers. There’s trouble brewing for your morning cup of happy if coffee production worries pan out. While global demand for caffeinated beverages is rising, it’s reported that warming temperatures in Brazil and Central America are threatening crops. Scientists predict that nearly 80 percent of the region that grows the most popular type of coffee, Arabica, will become unsuitable by 2050. In addition to the effect on local farming communities, coffee buyers could be faced with the expensive task of shifting bean suppliers and supply routes. Already, the coffee threat has prompted Starbucks to take action, helping coffee farmers improve their ability to grow plants in places like Chiapas, Mexico, where farmers lost 60 percent of their coffee production to disease spurred by increasing temperature and rain.
The coffee industry isn’t unique. These kinds of environmental threats and other industry challenges constantly crop up and are part of doing business, no matter what you produce. What makes them so difficult, however, is that they are often unpredictable and can drastically (and usually adversely) affect your bottom line. Though environmental factors are a fact of life, regrettably, your company and executive team do not change annual revenue growth expectations along with the natural fluctuation of supply chain challenges. So, how do smart companies ride the tides of environmental change and still hit their growth objectives?
The answer lies in technology and leading food manufacturers are investing in new ways to drive a competitive advantage. When you are competing against companies that are using margin and price optimization to improve their bottom line, you risk getting left behind if you are stuck relying on the whims of this season’s climate and the old ways of doing business.
A study made by MIT (Massachusetts Institute of Technology) concluded:
-If only Company A uses pricing software, it gains revenue at the expense of Company B
-If both companies use pricing software, then both companies gain
It doesn’t have to be impossible to maximize margins while balancing your supply and demand constraints, or coordinate raw material inputs, inventory, capacity, and demand forecasts to optimize product and channel mix. New tools exist to help you quickly analyze forecasted demand, supply and pricing to make more profitable decisions and guide sales toward selling the right product mix at the right price.
Don’t get left behind. Learn more about how you can avoid the bitter effects of today’s challenges sinking your margins and overall revenue growth objectives.